Until the price and release date of the NGP is announced I don't think much can be said about the viability of the NGP ...

Essentially, if the price is high enough, the release date is late enough, and the 3DS is popular enough, after the NGP is on the market for a year the 3DS could be selling 3 times as many systems on a monthly basis and have a userbase which is 5 to 6 times as large; and when you couple this with the NGP having much higher cost to develop games, with much longer development timelines, it would be very difficult for any publisher to justify developing games for the NGP.

In contrast, if Sony somehow releases the NGP at near to the price of the 3DS, and is able to release in the not too distant future, both systems could be viable and the generation could be much closer than the previous one.

 I don't think there is a big enough gap to really impact the long-term sales of either console. I mean the 360 had a year on the Wii and we've seen how that worked out. I think with both systems high launch prices, aside from launch month, neither will be posting big enough sales to gain any significient advantage. Looks like they're both going to have as many Christmas's as one another, which is the most important thing (Wouldn't put it past the NGP coming 2012 in Europe though).

 But I more quoted you to see if anyone can shed some light on PSP2 actually being more expensive to develop for. WE know 3DS developement costs have gone up alot relative to the DS, now apparently comparable to those of the Wii. While logic says that NGP being a strong system means more cost, surely those costs are driven down by the fact that alot of the tech used on PS3/360 games is easily transferred across. At least that seemed to be the story coming from Konami, SEGA, Capcom with their ports to the device and Epic / Id when asked about the thing.

 Until we know more about the NGP I guess it's a bit too hard to judge. 3DS seems to have alot of the Japanese publishers on board but the western world (Minus Ubisoft) still seems a bit cautious. I guess we'll get a better idea of publisher support at E3 and TGS but that's ages away :(.

He is right, the PSP isn't a failure. It successfully took over 30% of the handheld market from Nintendo which no other handheld in the history of handheld gaming consoles managed to accomplish.

Technically they did lose marketshare.  I agree with you in principle the key element was an expanding market, and that volume wise DS did even better, but from a business perspective as Nintendo went from essentially 100% marketshare to less marketshare of a total bigger pot they did lose some.

Basically, PSP you would say by being in the market prevented Nintendo taking the whole expanded market available - hence the drop in marketshare.

Marketshare is the total set of potential customers and remains 100% even as the market expands, so it is possible to do better in volume sales and profits and lose marketshare at the same time - which is what Nintendo did.

It isn't the "technology" that makes HD console games expensive ...

The amount of work required to make 3D graphical assets at the quality of current HD games, and the number of graphical assets required to produce detailed environments, dramatically increases the number of developers on a development team and the length of the project; and since the costs associated with employing a member of the development team represent the largest portion of the development budget, when you need to increase the size of your development team by 50% to 100% and increase the time to develop a game by 50% to 100% your costs skyrocket.

Edit: At how big of an impact the gap has largely depends on how popular the early system is. If the 3DS is as popular as the DS currently is, the 3DS could sell 20 to 30 Million units before the NGP is released. If the XBox 360 sold this many units before the Wii released, even with how much more popular the Wii was, it would have taken the Wii 3 to 4 years to pass the XBox 360 in total userbase.

20 million units is never going to happen - DS sold just over 10m in it's first full year... at a lower price then the 3DS. The 3DS has like, 6 -8 months headstart on the NGP with no Christmas headstart either. I'd guess it'll be about 7m ahead WW once NGP launched in Japan, but that's all speculative anyway :P.

 I've just not seen much to say NGP dev costs is going to cost significiently more then the 3DS (Which developement costs are relatively high for a handheld). We've seen porting takes next to no time whatsoever, which suggests that the tech / engine / graphical assets for companies already invested heavily in PS3/360 development should be easily transferable. Any difference could easily be a moot point if NGP games cost a bit more at retail too anyway, and if they sell more via digital means with higher profit margins.

 I'm not saying NGP won't cost more, just that there is absolutely nothing yet to suggest we should just assume costs will be double that of the 3DS, or on par with the PS3, or will take twice as long to develop. The only evidence we've seen thus far is ports taking 1-2 weeks and a few of the more tech-savy developers speaking good things about the device. 

 HD graphics arn't the only thing which drive these development costs up either, albeit they're a contributing factor. There are PS1 and PS2 games which cost $20m to develop and HD games which were made on a 7 figure budget, so clearly theres plenty of other factors to consider, namely the nature of the game and it's 'scope'.

Realistically, the DS sold so poorly initially because it was a poorly supported platform that launched too soon after the Gameboy Advance, it was an odd concept that people (really) didn't understand, and the hardware itself was very large and not particularly portable. None of these factors really apply to the 3DS, and its primary downside is its price which, when you look at iPods and whatnot, is not particularly high compared to other products that have sold very quickly.

Beyond that, one of the reasons I also said that the worst case senario depended upon the announced release date is because (today) everyone is making assumptions about when the NGP will actually release. If you look at the ARM processor roadmap, it is unlikely that the NGP would be able to have a worldwide release in 2011 with a significant supply of systems; and when you add to that the possibility that enough software might be delayed that the NGP might not have adequate software to launch a system until early 2012, it is possible that the NGP might be released a full year after the 3DS.

Regardless, the entire point I was trying to make was that there are still some very massive unknowns about the NGP today; and, until we get some more solid details, it is very difficult to say whether the NGP will be a viable platform.